TAIPEI Oct 5 Taiwan prosecutors said on
Wednesday they have detained the ex-chairman of Mega Financial
Holding and a key former executive of the company,
following a government probe into the state-run group's
violation of U.S. banking regulations.

Prosecutors have taken former Mega chairman McKinney Tsai
and former chief secretary Wang Chi-pang into custody as
suspects of serious crimes, in part because they could pose "a
risk of flight and destroying evidence" related to violations at
the New York branch of Mega's banking arm, said Chang
Chieh-chin, deputy chief prosecutor of the Taipei District
Prosecutors Office.

Chang had said on Tuesday Tsai and Wang were suspected of
being involved in breaching of anti-money laundering rules.

The duo could be detained for up to two months, Chang said.
Tsai stepped down as chairman in March.

New York authorities in August slapped Mega Financial's unit
Mega International Commercial Bank with a $180 million fine for
violations that included lax attention to risk exposure in
Panama.

It was the first time in a decade that a Taiwan-based
financial institution was penalized by U.S. authorities.
Taiwan's President Tsai Ing-wen said the case damaged the
island's reputation and created public mistrust about
supervision of the financial sector.

Current finance minister Sheu Yu-jer and ex-finance minister
Chang Sheng-ford will also be investigated by Taiwan's Control
Yuan, an investigative agency that monitors government, the
cabinet said in a statement late on Monday.

The government ordered the Control Yuan probe this week to
find out whether the finance minister and other officials were
responsible for inadequate oversight.

Taiwan is also currently investigating whether Mega
Financial broke local criminal laws.
(Reporting by Faith Hung and Jeanny Kao; Editing by Sam Holmes
and Muralikumar Anantharaman)

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